BIP 62: Deploy and seed Rari Fuse Pool

Category: Treasury / Goverance
Scope: Deploy Rari Fuse Pool | Approve collateral assets for Gov + Boost | Seed pool w/ treasury funds
Status: Pending

Overview

I am proposing to deploy a Fuse lending pool on Rari. Fuse pools are independent forks of compound, in this scenario badgerDAO would retain admin rights to manage pool assets and parameters. Rari receives an admin fee (10%) of the interest earned on all loans.
More Here: Fuse | Rari Capital

This pool will give badger native asset holders another location to put their assets to work. If the pool is successful in having abundant use over the initial couple months, I will be advocating for Rari to share a portion of the admin fee with badger going forward.

It will be the job of BADGER holders to manage this pool going forward, irresponsible asset or parameter selection can add systemic risk to the pool so careful consideration is needed for any decisions.

Details

There are 3 decisions as part of this BIP

Deploy the Pool with below parameters

The native Badger assets will not be enabled for borrowing so that they can retain their base uses in governance and the boost. We can also discuss adding other vault tokens

Include Native asset deposits in Governance + Boost

I am proposing to include deposited BADGER (fBADGER), bBADGER (fbBADGER), and bDIGG (fbDIGG) at equivalent dollar value in Governance and Native balance for Boost. Since they will not be enabled for borrowing there is not a concern around tokens being double counted. bDIGG collateral deposits will also be included in the DIGG rebase options calculations.

This will enable badger users to do things like leverage up their boost (borrow USDC against BADGER/DIGG buy more BADGER/DIGG), earn non-native yield as BADGER only holder (borrow WBTC against BADGER, deposit into BADGER to earn high yield on WBTC)

Seed the Pool with assets from the treasury

When the pool launches there will not be any funds to borrow. With the expectation being that Badger holders will want to use the platform to borrow stables to farm with or lever up on positions it will be critical to the success of the rollout to have assets available for depositors. The proposal is for $1million in USDC to be added on launch with another $1million to be added if the pool reaches >50% utilization.

  • USDC - $1million (with option to add $1m more
  • WBTC - 30 WBTC

Please discuss asset mixes and sizes in the responses, a new poll can be added with different seed parameters if popular.

Governance

Deploy BADGER Rari Fuse Pool
  • Yes
  • No

0 voters

Include Native Collateral Deposits in Governance & Boost
  • Both
  • Governance Only
  • Boost Only
  • Neither

0 voters

Seed the Pool with up to $2m in USDC/DAI + 30 WBTC (As described in BIP)
  • Yes
  • No

0 voters

2 Likes

Full support here.

2 clarifying points/comments from the discord dialogue over last week or so also.

  1. bDIGG won’t count for governance only boost
  2. BadgerDAO can add/subtract USDC or other borrowable assets to the pool as it sees fit.

Thanks @jonto for all your efforts in putting this together and for the open dialogue over last week or so!

1 Like

ibbtc to da moon

rocket ship

Once again, fees?

10% with an option to clawback is not ideal. Badger is deploying capital into their pools, so that increases their TVL and their standing in the market.

If anything, Rari should be giving badger 100% of the fees or it should be some sort of 50/50 split. Why can’t we use these fees today to market buy back Badger and increase the token value?

1 Like

I’d also like to see Badger offering the leverage up services instead of just making the users do it. Now, that is something that is worth paying a fee for since there is some active management going on there.

The 10% is on the interest paid so if its 11% interest annually 1% of that is going to rari. I had a fee reduction as part of the initial request but pools that had gotten fee reductions in the past had committed a lot more capital. im sure once the benefit of boost and governance inclusion is clear we will have a good chance at approval for a fee reduction/share.

Anything leveraged is pretty tricky to manage in a vault. Straight 2x badger exposure could possibly be built using the 2xBTC FLI structure from index coop. I am looking at scoping out the “Deposit BADGER, earn BTC” vault for badger only holders.

the main takeaway is that if we get this base layer infrastructure in place then theres cool stuff we can build on top, just need the foundation first.

JetFuel does it pretty well with their Fortress leveraged vaults. Look at single asset BTC as an example.

Ok. Makes more sense now. Let’s codify that into the agreement with Rari from the start. Don’t want to change the rules after the fact.

I don’t think I will use this, however overall I believe this is good for Badger (and Rari) so I am supportive. And I believe it is crucial that native collateral deposits are included in governance and boost.

The only thing I don’t like of this BIP is that it does not have any cost-benefit analysis for the use of the treasury. I get that the pool needs to be seeded, but it also needs to make sense to do so.

I asked a similar question in discord discussion

How it was explained to me.
“its all based on utilization, its linear from 0-30% between 0 and 80% utilization. so if 400k is borrowed from the 1m thats been deposited the rate will be 15%. hopefully that then attracts depositors, if another 1m usdc flows in then the rate goes down to 7.5%”

Not sure that’s everything your after but maybe partial?

its a balance of how much decision making we want preprogrammed in. could say something like “if the USDC isnt earning on average 10% APY after 6 months then it will be withdrawn” but it paints you into a bit of a corner. At any time post launch a proposal can be created to pull the funds, there is no lock or anything else like that.

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Of course if something doesn’t work out as intended, it can be pulled or fixed after the fact. But the point is taking the right decisions and that requires, at least, some assumptions / analysis of the information at hand.

I had to do some research on my own but based on the recent information regarding the treasury, I think there is enough room for that. I just think that should have been in the BIP itself. For me any proposal requesting the use of treasury funds should explain why it is in the best interest for the DAO to deploy those funds.

BTW if this is approved, I actually don’t think it would be smart to withdraw with such parameters (based only on the APY earned). If we deploy this pool and it is working well and being widely used by the community, then I’d call it a success even if the APY is low. We need to view at things in a more strategic way.

1 Like

agreed on all points

Nice development and I am sure this proposal is good